2019 ended with a bit of an uptick in overall deal value versus the first three quarters of 2019 with Q419 deal value totaling $24.1 billion. However for the full year, 2019 was the third consecutive year of decreases in annual M&A value. 2019 M&A transactions totaled $85.2 billion down 17% from 2018 value of $102.4 billion (and 28% from 2017 value of $119 billion). Global geopolitical tensions, combined with ongoing trade pressure coming from the US, contributed to significant contraction of cross-border transactions within the sector that in prior years had helped fuel M&A activity, particularly out of Asia and Oceania region. Total cross-border M&A was $23.5 billion, a decrease of $20.5 billion from 2018.
“M&A activity in Q4 2019 was seasonally strong fueled by three large transactions with deal value greater than $1 billion. The strength of Q4 2019 was not enough to mitigate a third consecutive year of decreasing M&A value within the sector.”
Despite sector headwinds which dampened underlying sector M&A activity in 2019, the underlying fundamentals remain strong and supportive of M&A activity. Urbanization continues to place ever-increasing demands on aging infrastructures, which combined with housing needs will continue to provide positive factors to drive sector growth and be a catalyst to create M&A opportunity. Recent movements on a potential trade deal between China and the US could reduce some of the friction that has contributed to decreases in deal making within the sector. With record levels of available capital and strong underlying sector fundamentals, 2020 is likely to benefit from reduced trade friction and a softening geopolitical tensions.
The information presented in this report is an analysis of deals in the global E&C industry. Deal information was sourced from Thomson Reuters and includes deals for which targets have an SIC code that falls into one of 60 E&C industry groups. Certain adjustments have been made to the information to exclude transactions which are not specific to E&C or incorporate relevant transactions that were omitted from the SIC industry codes.
This analysis includes all individual mergers, acquisitions, and divestitures for disclosed or undisclosed values, leveraged buyouts, privatizations, minority stake purchases, and acquisitions of remaining interest announced between January 1, 2017 and December 31, 2019, with a deal status of completed, partially completed, pending, pending regulatory and pending completion, and excludes all rumors and seeking buyers. Additionally, transactions that are spin-offs through distribution to existing shareholders are included.
Percentages and values are rounded to the nearest whole number which may result in minor differences when summing totals.